The Other 1%!

These days, we’re hearing a lot about the 1% — the percentage of the population who control over 35% of the nation’s wealth, and control, at a minimum, 23 times the wealth controlled by the average person. And while it looks good on the books, right now, this isn’t the 1% anyone wants to be in, given the ire directed their way. But that’s not the 1% this post is about.

This post is about the 1% of companies that have implemented ILO (International Labour Organization) compliant supplier codes of conduct that are monitored and enforced. As per a recent publication by Zurich and Rockwell Automation entitled Safe Supply Chains Help Produce Sustainable Business, only 43% of major US companies have implemented supplier codes of conduct. Of these codes, only 10% reference ILO conventions. In addition, only 25% of companies perform even minimal monitoring against their supplier codes of conduct. In other words, the percentage of companies that have codes of conduct that reference ILO conventions and that are monitored is 0.43 * 0.10 * 0.25 = 0.01, or 1%! Ouch!

This is a disgrace! This is not the 1% we want in the Supply Management world! Every organization needs to shape up and do something about this right now.

  • Step 1: Get a supplier code of conduct. If your organization doesn’t want to invest the time drafting its own, borrow one (such as the publicly available JLP Responsible Sourcing Supplier Workbook) and modify it as appropriate or simply state that your organization complies with all relevant ILO labour standards, summarized in the Brief Introduction to International Labour Standards, and you have the right to monitor and inspect supplier operations to make sure they do the same.
  • Step 2: Make sure all relevant ILO standards are referenced.
  • Step 3: Monitor suppliers and, with other customers, insure an audit is done on an annual basis (by a responsible, neutral third party)*.

This isn’t hard. Just do it!

*It’s too disruptive to a supplier, and too costly, for every customer to audit the supplier every year. Instead, big customers should band together and hire an independent third party who’s good at conducting audits to perform an annual audit and make the results available to all customers, who can collectively apply pressure to a supplier violating ILO and individually take issue with any aspect of the supplier code of conduct that goes beyond ILO that is specific to that customer.